On January 31, Samsung Electronics held a Board of Directors meeting and announced a plan to increase shareholder value with the measure of a stock split.
First of all, the Board of Directors of Samsung Electronics resolved to implement a 50:1 stock split as one of its measures to raise shareholder value. Once a general shareholders' meeting finalizes the stock split, current shareholders will receive 50 new shares a share, and new investors will be able to buy one share of Samsung Electronics, which is currently around 2.5 million won (US$2,250), for around 50,000 won (US$45).
Samsung Electronics descanted on the backgrounds of the plan, saying that there had been a slew of opinions that its high stock prices sap people’s investment confidence so the company took such opinions into consideration and the stock split would empower more people to buy and hold Samsung Electronics stocks and receive dividends. The Korean IT giant expected the plan to help ramp up corporate value through the activation of stock trading in the long term.
Samsung Electronics also announced that the company completed its purchase and cancellation of treasury stocks in 2017 disclosed in an announcement of earnings in the fourth quarter of 2016 as planned. In the past year, the company purchased 3,302,000 common shares and 826,000 preferred shares on four occasions and completed the cancellation of them and executed a total of 9.2 trillion won (US$8.2 billion).
In the board meeting on the day, Samsung Electronics also resolved to allocate 50% of its cash flow in 2017 or 5.8 trillion won (US$5. billion) as dividends. The dividend amount swelled by 1 trillion won (US$800 million) from the original amount of 4.8 trillion won (US$4.3 billion). This is a year-on-year jump of 46%. 21,500 won (US$19.3) per common share and 21,550 won (US$19.4) per preferred share will be paid as dividends.
"We are planning to use at least 50% of our free cash flow as resources for shareholder return and pay dividends at the level of 9.6 trillion won (US$8.6 billion) each year for the next three years," president Roh Hee-chan said.
Samsung Electronics announced that last year, the company enjoyed the best-ever business performances by posting 239.575 trillion won (US$215.6 billion) in sales and 53.650 trillion won (US$48.3 billion) in operating income. In the fourth quarter, its sales and operating income reached record quarterly highs, hitting 65.978 billion won (US$59.4 billion) and 15.147 trillion won (US$13.6 billion) respectively. The company also posted an operating profit to sales ratio of 22.4% last year.